NZ dollar falls ahead of business survey

Photo / Dean Purcell

The New Zealand dollar fell against the US currency ahead of today's Quarterly Survey of Business Opinion, trading in a tight range with Wall Street closed for the Independence Day holiday.

The New Zealand Institute of Economic Research's quarterly survey of business sentiment is expected to show firms are picking increased economic activity in the third quarter as the country shrugs off the lingering effects of the Christchurch earthquakes and the global financial crisis.

That's in line with the National Bank Business Outlook, which has shown improving sentiment in recent months. The QSBO is one of New Zealand's longest running business surveys and a key indicator of economic activity for the Reserve Bank.

"I'm expecting the QSBO to be supportive of the kiwi," said Khoon Goh, head of market economics and strategy at ANZ New Zealand.

"If all the indicators point in the same direction that suggests the OCR (official cash rate) at 2.5 per cent is on borrowed time."

The kiwi recently traded at 82.90 US cents, down from 82.95 cents yesterday, and was little changed at 71.22 on the trade-weighted index of major trading partners' currencies from 71.24.

It rose to 77.21 Australian cents from 77.18 cents yesterday, and gained to 66.92 yen from 66.89 yen. It fell to 56.98 euro cents from 57.03 cents yesterday, and rose to 51.49 pence from 51.41 pence previously.

Greece was back in the headlines after ratings agency Standard & Poor's said it would regard a plan by French banks to rollover privately-held Greek debt as a default. The euro fell on the back of that, but recovered in the session to recently trade at US$1.4543, little changed from US$1.4549 yesterday.

The Reserve Bank of Australia will review monetary policy today and is expected to keep rates unchanged at 4.75 per cent as authorities wrestle with the dichotomy between the rampant mining sector and the rest of the lucklustre economy.

The kiwi may trade between a range of 82.40 US cents and 83.20 cents, Goh said, but was unlikely to break through the topside level.